Risk Management in Transport PPP Projects
In the Islamic Countries
241
For airports, commercial ports and touristic marinas PPP contractual documentation excludes
the credit agreement. Financial capacity selection criteria are instead applied and requested at
the tendering stage.
As mentioned in previous sections, a standardized detailed list of risks applicable to PPP projects
in Turkey is not in use at present. According to the Turkish Authorities consulted as part of this
study given the number of PPPs implemented in the country there is a consolidated experience
of elaboration of contractual documentation that enabled over the years the refinement and
improvement of the existing documents. PPP contracts regulate in detail the most relevant risks
associated with the development and implementation of PPPs. The following Table summarizes
the usual allocation of risks between the public and the private sector outlining the underlying
rationale.
Table 40: Indicative risk matrix in transport PPPs in Turkey (by risk category)
Risk
type
Risk category Usual allocation of risks (public/private/shared)
Context-
related
risks
Political and
legal risks
In general terms, the public party in Turkey bears responsibility for political
events outside the control of the private partner as well as for changes and
the regulatory and legislative system.
Macroeconomic
risks
Macroeconomic risks are shared . The public sector retains the risks
associated with the management of the liabilities and fiscal risks i.e. risks
stemming from demand guarantees. Inflation related risks impact on the
concession financial performance of the projects and are particularly
impacting on the private sector, both at the construction stage and operation
stage. Inflation risk is particularly relevant for those contracts regulated
according to the Turkish Lira. The use of the USD currency in the airport
projects partly mitigate the macroeconomic risks on PPPs, specified that
inflation risks still could negatively affect the demand.
Project
risks
Financial credit
risks
Financial credit risks are retained by the private sector , who is also
responsible for defining the project financing structure of the PPP initiative
and for timely reaching the financial close. Delays in reaching the financial
close and commercial close may result in early termination of the contract
unless these are attributable to the public sector.
Design,
construction
and operation
risks
Preliminary design and project technical specifications, as well as
Environmental Impact Assessment studies, are generally prepared by the
procuring authorities, who thus retain the risks associated with these
elements. The public sector also retains the risks related to disruptive
technologies. i.e. those ITS and ICT solutions or special procedures and
protocols not in place at the time of the definition of the project design and
project construction, but required by international or national legislation, to
enhance and enforce security and safety of transport operations. Land
purchase and site risks are also generally borne by the public sector, specified
that the contractor is responsible to submit the applications and accomplish
the administrative procedures to develop and implement the project.
Construction and operation risks are borne by the private party.